$DEBASE - A Composable/Modular Algorithmic Stable Coin Protocol

https://t.co/v3383S9VsP
https://t.co/mAul2JSyWE

A guest post, written by the Debase community.

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Algorithmic stable coin protocols & in particular elastic supply tokens (e.g. AMPL, Base) have emerged as contenders for decentralized price-stable assets. The premise of such tokens is to convert price-volatility into supply-volatility, in search of a price peg (e.g. 1 USD)

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The idea is that at sufficiently large market capitalisations supply-volatility will taper off and you are left with a price-stable asset. So far this has not been the case

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Projects like Ampleforth continue to experience sustained price and supply volatility even as market capitalisation has ballooned. Subsequent iterations have tried to improve on this model by modifying one or more of the static parameters; BASE, RMPL etc., come to mind

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While the subsequent iterations modified a fixed set of ‘flexible’ parameters, the fundamental mechanism of elastic supply tokens remains static. Debase is the first elastic supply token to introduce completely dynamic parameters (16+).

This is the argument for a 5% allocation to Bitcoin.

It’s a summary of Wences Casares’ blog post written nearly two years ago (with direct quotes copy pasted).

Part one: Why Bitcoin could hit $1 million

Part two: Why you should buy Bitcoin

Here we go! 👇👇👇

0/ First, if you don't know Wences, you should.

He founded Xapo, a Bitcoin custodian in 2014.

He's also a board member at Libra, PayPal, and Kiva.

But most importantly, he's responsible for bringing thousands of people into Bitcoin.

I'd recommend his podcast with @laurashin

1/ PART ONE

Bitcoin right now is similar to the Internet in 1994.

You don't need to know how the Internet works to understand it.

You don't need to know how Bitcoin works to understand it.

Investors who understand this will have an advantage over investors who don't.

2/ Up until Bitcoin, all computer platforms belonged to a person, company, or government.

Those platforms had to obey the will of their owners and the rules of the jurisdiction where they resided.

Bitcoin takes control away from the owners.

3/ A sovereign only obeys its own rules, no one can impose rules on a sovereign.

Kings and Queens used to be sovereign.

Then nation states became sovereign.

Now, for the first time, a computer platform has the aspiration to be sovereign.

This is revolutionary.

🚨 @naval @balajis and @shl live on Clubhouse right now🚨

.@naval: I can't imagine working on anything besides crypto. Crypto was the biggest changemaker and biggest wealth maker of 2020.

.@balajis: Crypto is a civilization technology

.@naval: Property rights is one of the hardest problems. That's why we need nation state. Nation states do property rights. #BTC is solving this. #BTC is solving the hardest problem. If we can solve the BTC problem, we can solve everything else (decentralized media, file storage)

.@naval: I think the next big thing we're going to see is decentralize social networks. All the centralized social networks just created the 2008-2009 moment, it's going to change everything.

1/21 Don't fear it, secure it.

A thread on creating a secure #Bitcoin backup with the Hodlr Disks from @hodlrswiss.

If you value permissionless money & the ability to transact without being censored then self-custody & get your bitcoin out of third party control.

2/21 This thread is the short version of a more detailed article which can be found on my

3/21 Covered here is unboxing, setting up, & torching the Hodlr Disks made by @hodlrswiss. In Nov. Hodlr Swiss reached out to see if I would be interested trying their new stainless steel backup. It looked really cool so I said "hell

0/ Yesterday was my last day as the Rosetta Technical Lead at @coinbase. Starting tomorrow (crypto never sleeps, right?), I’ll join @el33th4xor, @kevinsekniqi, and the rest of the talented team at @avalabsofficial in building @avalancheavax.

1/ When I joined Coinbase out of college, I thought I “knew” blockchain. Boy was I wrong! Standardizing and scaling asset addition at Coinbase while collaborating with the top blockchain engineers at the top projects by market cap flipped my world upside down.

2/ I don’t think there is any other place that ramps you up into the magical moon math of crypto as fast as @coinbase and I firmly believe it is the best place for any crypto engineer to start their career. Good news! They're hiring!

3/ To all my former coworkers, I want to say thank you for everything you’ve taught me. I’ll never forget all the time and energy you spent helping me become a better engineer and a better person. I have no doubt that you’ll continue pushing Rosetta forward for years to come.

4/ For the next few months, I’ll remain an advisor to the Rosetta project. I will lend a hand to asset issuers implementing Rosetta for the first time and chime in on high-level design decisions.

Why is it so difficult to understand what Bitcoin involves?

Because it affects various mental models.

Thread.

Inflection Point / Critical Mass:

The increase in the liquidity of the FED in 2020 due to Covid has generated a turning point in the BTC.

Investors have gone from thinking of BTC as a risky asset to thinking that the risk is not having it, increasing confidence towards it.

Compound Interest / Velocity:

The BTC has gone from $400 to $40k in 5 years, which represents an annual return of 150%, 15 times more than the average stock market return.

This has been one of the largest and fastest creations of wealth in history.

Scarcity / Supply and Demand:

The greater the scarcity of an asset, the greater its value.

As BTC becomes popular, its demand increases, while its supply does not vary. Which makes the price go up.

Cooperation:

The BTC is decentralized.

Their trust is not based on the authority of a central bank, but on the cooperation of the population.

The greater the cooperation, the greater the trust and therefore the greater the value.

I usually stay away from price predictions, but this time I couldn't help it. Just published "10 reasons why bitcoin will hit $100.000 in 2021".

Share it with a normie friend, maybe he/she will understand the value proposition of

Reason no. 1: during its 12 year-old existence, Bitcoin has performed a lot better as a store of value than gold.

Reason no. 2: Bitcoin is easier and less expensive to transfer than gold. This one is pretty self-explanatory, as gold is heavy and expensive to secure.

However, I believe that we should look up to gold a lot more often & look down to USD less

Reason no. 3: Bitcoins can be carried across borders a lot easier than gold and cash.

It's simple, really. With only a general-purpose electronic device (phone, laptop), piece of paper, or even 12 words that you memorize, you can move your wealth in a different country.

Reason no. 4: Bitcoin transactions cannot be censored.

In a world where PayPal and Visa can dictate your policy as a business and can shut you up from expressing political opinions, Bitcoin has a lot of value.

The #STABLEAct is a confused attempt at regulating perceived harms that are not actually caused by the technology, but are, ironically, inherent in the existing financial system that cryptocurrencies are designed to replace

👇🏽

Stablecoins, by their nature, can only INCREASE access to financial services. Unlike the existing system, they do not require the use of a bank account

The existence of stablecoins does not prevent consumers from using any other traditional payment, savings or credit offerings

In contrast, people can and do lose access to financial services when banks freeze or close their accounts

This happens when banks make arbitrary and opaque risk decisions that are in turn based on cumbersome regulations which deputize banks to do the government’s job

According to the press release

1. Stablecoin issuers could take advantage of low income consumers
2. Stablecoins are an ‘outsourced issuance’ of US dollars
3. Stablecoins pose market, liquidity, and credit risk

But all of these concerns are

The press release compares stablecoins to ‘shadow banks’ e.g mortgage & payday lenders, that lend on a fractional reserve basis, and often take advantage of consumers

This is the opposite of stablecoins like USDC, which are fully collateralized and don't charge interest or fees

'Twas the night before Christmas, and try though they may
Not a token was mooning, not even AAVE
Market buys getting sent by the apes without care
In hopes that new all-time highs soon would be there

Our traders were summoned post-haste from their beds
While visions of making bank danced in their heads
SBF in his sweatshirt, and I in my tee
Had just downed something we're gonna label "coffee"

And amongst all the chaos, amongst disarray
Amongst the red numbers borne out of the fray
From all of the carnage arose one big loser
A coin with a regulatory accuser

For days, XRP has been in the gutter
Because of the claims from Jay Clayton the FUDder
U.S. folks had to spew their positions before
The exchanges could manage to shutter the door

Exchanges like Coinbase -- they threw up their hands
What to do when your government comes with the bans?
To delist or restrict? Or just pause for a while?
It was clear they'd react -- that's Coinbase's style

This might take a few tweets to get out.
1/ The ICO boom in 2017 and the altszn in early 2018 were unique in that crypto was a largely unregulated space where countless fools were getting lucky on the bad luck of greater fools. This was largely fueled by Ethereum and the ability

2/ to create tokens and contracts from thin air but it got thrust from the post halving BTC bull market and the unique phenomenon of 'crypto kitties' which were both like booster rockets and drew huge media attention to the entire crypto space

3/ Crypto wasn't new in 2017-18 but it was new to most of the people who were seeing it on the evening news, CNBC, etc. Seeing construction workers buying new trucks with crypto riches and idiotic crypto-rich in lambos and moving to Puerto Rico -

4/ - these images captivated lots of people and inspired the idea of 'I missed out before, I don't want to miss out this time' in relation to stocks, internet, tech, real estate, and more. The important ingredient was 'If those people can do it, I can do it'

5/ The inclusion of a character like John McAfee and the entire ICO industry created a greedy free for all where for every good project there were fifty worthless ones - but sometimes, a diamond emerged from the shit

1/21 The pros and cons of cryptocurrencies with an immutable, decentralized, public blockchain, why banks aren't going away, and what that means for XRP.

A thread. 👇

2/21 When I got into crypto, one of the first things I learned was that the blockchain is immutable. Once something is stored on it, it can't be changed. Once you decide to make a transaction, nobody can reverse your decision, not even the State. This gives you real power.

3/21 The blockchain is also public. Anyone with the right software can view every transaction on it. This keeps people honest and builds trust b/c everyone knows everyone else can audit the blockchain and ensure everything is on the up-and-up.

4/21 A good blockchain is also decentralized. No individual, company or State can exert control over it independently. Without consensus, things cant't change, and that kind of monetary stability is exactly what we need to stop the current brrrrr of inflationary money printing.

5/21 Crypto also offers you the ability to "be your own bank". You don't have to pay high fees or keep your money in inflationary fiat that's losing value every year. Want to send money to another country? Open an app and make it happen. Fast, cheap, no bank required.

1/20 #Bitcoin $BTC I created my own risk management calculator some time ago, 10 entries 10 take profits, avg to position sizes. + many advanced things.

Bitcoin recently hit $34,000 yesterday when as recent as October 10th, it was $11,000

Here’s some unsolicited advice: If you feel you have “bad luck” with investing; i.e. you feel that “if you buy Bitcoin today, the price of Bitcoin will drop”; don’t buy in.

Here’s why I say so

I try to never categorically give financial advice because I’d rather show people how I’d make decisions if I were in their shoes and I like (prefer) people to think for themselves and consciously make decisions they feel is best for them or decisions they can live with and not

just go off what some random person on the internet says BUT I’ll make an exception this time and tell you this, if you think you have bad luck with investing, don’t buy in. Here’s why:

People that feel they have bad luck with investing often have 3 things in common:

1. Fear:

This fear might be informed from bad experiences they’ve had in the past or it might be some irrational fear but they have high fear of losing. If you feel like you have bad luck with investing, anything (good/bad) that happens to your investment is going to feed into that fear.

In fact, you could go as far as looking for anything that would confirm your fear that you’ve made a bad decision. You’ll suddenly start seeing news articles saying that asset will drop, you’ll watch the charts and any small drop in price would confirm that fear.

2. Because of

I've concluded that the real problem is that bitcoiners don't understand basic microeconomics. So here's a bit of a primer. 1/

Scarcity is a function of demand, and it affects price. For any good, if demand exceeds supply, it is scarce. That is true regardless of the absolute number of units of the good available for purchase. 2/

Imagine there are 5m Steinway grand pianos in the world, of which 1m are available for purchase. The world's population is about 8bn. So if everyone in the world wanted a Steinway grand piano, they would by any reasonable definition be extremely scarce. 3/

And because of their scarcity, competition for them would drive up their price. Steinway grand pianos would be very expensive things (as indeed they really are) 4/

Bitcoiners will no doubt have followed this so far, because this is their scarcity economics: there can only be 21m bitcoins, therefore only a tiny fraction of the world population can own bitcoin, therefore bitcoin will be very, very expensive. 5/

Scathing comments on Crypto from Mr Rabi Shankar - Deputy Governor, RBI.

1) On crypto being treated as a currency:
"Currency always has an issuer, usually a trusted entity like the sovereign. Even when gold is used as a currency, the gold coins had to be issued by a sovereign.

Secondly, historically, a currency has always been either a commodity with intrinsic value or a debt instrument. Cryptocurrencies do not conform
to this understanding as they do not have an issuer, they are not an instrument of debt/commodities nor do have any intrinsic value.

Currency needs trust, not everything that can be trusted is a currency. So even if technology (as
in a blockchain) provides the trust for cryptocurrencies, they can at best perform the role of a currency within the private and closed environment of that cryptocurrency.

They do not, and should not, automatically become a currency for the larger society "

2) On crypto being treated as a financial asset : "This is also problematic because all financial assets have underlying cash flows and need to be some person’s liability.

I often hear the argument: Bitcoin mining is wasting enormous amounts of energy.

Bitcoin mining uses about the same amount of energy as a small country and that is fine!

Time for a thread:

To start, energy consumption in general is not a bad thing. Without it, civilization as we know it would simply not be possible.

If we would monetize your manual labor by putting you on a rowing machine you would have produce approximately $0.30 of value per day.

Energy grids are in nature in efficient. It is impossible to tranport electrical energy over long distances. Because of this approximately 6% of the US energy production is wasted because of losses alone. Just about 3.5X the total energy consumption of the Bitcoin network!

Varying load, seasonal or daily, poses challenges to the grid and the producers. It is for example not always possible or easy to lower supply to match demand.

This brings the need for balancing the network. Without it, the grid will become unstable.

With the increase of renewable energy, the need for load balancing solutions will continue to grow:

Solar energy only creates energy when the sun shines. Wind energy only creates energy when the wind blows.

I've received many questions from people considering to set up a #Bitcoin multisig wallet but confused about the backup process, what should be backed up, and why.

🧵So here's a thread on backing up multisig wallets - what, why, and how.

The main caveat in a multisig wallet is that, while you need only a threshold of devices (ie. 2 of 3, 3 of 5, etc.) to sign a transaction, losing access to even a single device could potentially prevent you from being able to spend the funds - if you don't back up properly!

The reason is that (usually) in order to make a Bitcoin transaction, it is not enough to be able to sign it, but you also need to provide the "terms for spending", that is, the Script (code) that is used to lock the coins.

That's because the full script is usually not stored directly on the blockchain, but only as a hash (a unique identifier of it).
Then on spending, you need to provide both the original script code which matches that hash, and satisfy any condition that the script may include.

In a single key wallet, this is trivial.

The script is composed of the public key of your wallet and a few standard commands - and satisfying it requires the signature for that key, so both the script and signature can be constructed by having access to that one private key.